TUESDAY, JUNE 14, 2011
Nicaragua News Bulletin (June 14, 2011)
1. Ortega sends state of nation report2. Poverty continues to drop slowly
3. Assembly passes micro finance law
4. Senators interrogate Farrar
5. Nicaragua-Honduras restore trade
6. Include environment, group tells candidates
7. Ground broken on Chureca homes
8. Assistance for agrotourism
1. Ortega sends state of nation report
President Daniel Ortega sent to the National Assembly on June 10 a report on the state of the nation as of the end of 2010 which gave details on advances in the areas of employment, poverty reduction, investment, exports and others. The report noted that, “The growth of 4.5% in Gross Domestic Product was principally associated with the recovery of the world economy which favored an increase in exports and the generation of stimulus of internal demand, in an environment of macroeconomic stability.” According to the report, Nicaragua's GDP grew from US$5.23 billion in 2006 to US$6.55 billion in 2010. Foreign direct investment grew by 17% from the previous year to a total of US$508 million.
Economist Adolfo Acevedo said that he did not have confidence in the government's figures on employment. He said the government should specify the number of people in the economically active population and then specify the numbers employed, underemployed, unemployed, full time workers, and part time workers, “not just in percentages but in absolute numbers.” These, he said, are revealed in a quarterly government survey and should be made public.
Economist Nestor Avendaño pointed out that, according to the report, Nicaragua's trade deficit was US$1.6 billion. This, he noted, was balanced by US$823 million in family remittances, the US$508 million in foreign investment noted above, and foreign assistance in the amount of US$472 million. He said that the “solidarity payment” to low salaried government workers “did not generate inflationary pressures nor did it reduce foreign currency reserves; rather it helped the population purchase the basic basket of consumer goods and supported economic activity.” (Radio La Primerisima, June 10; El Nuevo Diario, June 11, 13)
2. Poverty continues to drop slowly
The International Foundation for Global Economic Development (FIDEG) last week announced new figures from its continuing study of poverty in Nicaragua. According to FIDEG, “The results suggest that in 2010, at the national level, 44.5% of the population lived in conditions of moderate poverty [down from 44.7% in 2009] and 9.0% lived in extreme poverty,” down from 9.7%. The FIDEG report said that “the wellbeing of Nicaraguans, measured in terms of consumption, has improved, principally in rural households.” With reference to the rural areas, the report noted that moderate poverty was reduced from 67.8% in 2009 to 62.8% in 2010. Extreme poverty dropped from 18.2% to 15.9%. The study surveyed 1,700 households throughout the country with funding from the Netherlands and Switzerland.
FIDEG President Alejandro Martinez Cuenca emphasized that, between 2009 and 2010, in the countryside 37,200 persons emerged from extreme poverty and 124,900 were able to leave behind moderate poverty. Also, in urban areas, 50,000 people emerged from extreme poverty and 14,000 from moderate poverty. He added, “That is not to say that there weren't people who fell into poverty, but these figures are very encouraging.” He said, “People saw positive changes in their welfare throughout 2010 because they were receiving more income particularly in the countryside” with high prices for the crops farmers produce. The report noted, however, that a drop in agricultural prices would have a negative impact on rural households.
Paul Oquist, presidential advisor for national policy, said these current levels were still not acceptable and the goal was to reduce extreme poverty to zero. [The World Bank classifies extreme poverty as living on less than US$1.25 per day and moderate poverty less than US$2 per day per person.] He noted that the United Nations Food and Agriculture Organization has said that Nicaragua will achieve the U.N. Millennium Development Goals, including reductions in poverty and malnutrition, by 2015.
Economist Rene Vallecillo said, however, “The government's assistance programs impact extreme poverty in rural areas which is where we see the drop in poverty, but we can't say that the government is reducing poverty but what it is doing is keeping it from increasing.” He added that a growth rate of 3.5% to 4% is not enough to make a significant impact; what is necessary is a growth rate of between 7 and 8%.
In related news, the government released figures on June 2 indicating that Nicaragua had generated 325,000 new jobs during the period from January 2010 to the end of the first quarter of this year, mainly in the informal sector, lowering the unemployment rate from 8.2% to 6.8%. Policy advisor Oquist said that the government had created many jobs in the rural informal sector through programs such as Zero Usury.
Labor Minister Jeannette Chavez said that more people are employed in both the formal and informal sector. She explained that in 2007, 320,000 workers were paying into the Social Security system, indicating participation in the formal labor market; by April of 2011 that number had increased to 572,000. In 2007, there were 14,000 registered employers in the country but, by April of 2011, that number had increased to 22,000. (Radio La Primerisima, June 2, 8, 11; El Nuevo Diario, June 9, 13; La Prensa, June 8,)
3. Assembly passes micro finance law
On June 8, the National Assembly passed a law regulating the micro credit industry in Nicaragua giving protection to borrowers and facilitating a revival of the sector. Fifty-four of the 92 members of the Assembly voted for the measure. Sandinista Deputy Walmaro Gutierrez, chair of the Committee on the Economy, said that micro credit “should not continue to be a business for non-governmental organizations but rather should have a poverty-fighting role.” He noted that previously the micro credit market operated “under the law of the jungle; nobody regulated it and there were no legal protections for the consumer.” The new legislation, which regulates the activities of institutions that together handle a total of more than US$200 million per year in Nicaragua, prohibits the charging of commissions and other additional fees. Interest cannot be capitalized except after an agreement with the borrower based on a restructuring of the loan.
Rene Romero, general manager of the Nicaraguan Association of Microfinance Institutions (ASOMIF), said that the law will strengthen the culture of prompt payment of loans and will generate confidence among national and foreign investors. Interest rates, which currently vary between 16 and 48% annually, are expected to come down as a result. Twenty-two of the country's 54 microcredit institutions are affiliated with ASOMIF.
A number of opposition deputies proposed an amendment to include the cooperative ALBA-CARUNA, which makes loans funded from the sale of Venezuelan oil, but the amendment failed and cooperatives remained outside regulation by the law.
The law had been passed on first reading in 2006 but died in committee. A movement of borrowers grew in the rural areas of Nicaragua in 2009 protesting the high interest rates and the capitalization of accumulated interest resulting in the loss of whole farms after default on small loans. The National Micro-Finance Commission (CONAMI) is the regulatory body that will supervise enforcement of the new law. The Nicaraguan government had promised the International Monetary Fund (IMF) that it would achieve passage of the law. (Radio La Primerisima, June 9, 10; La Prensa, June 9)
4. Senators interrogate Farrar
Sen. Robert Menendez (D-NJ) excoriated President Daniel Ortega and US President Barack Obama's nominee for ambassador to Nicaragua during a Senate Foreign Relations sub-committee hearing on several Latin America ambassadorial nominees last week. Menendez accused Ortega, who took office in Jan. 2007, of manipulating elections. He said, “He [Ortega] and his Sandinista party have impeded peaceful demonstrations, silenced the business community, taken control of the communications media, politicized government offices, and expropriated public funds.”
Menendez, who is Cuban, was joined by fellow anti-Castro Cuban, Marc Rubio (R-FL) in criticizing Obama nominee for ambassador, Jonathan Farrar. They claimed that, in his current post as head of the US Interests Section in Cuba, Farrar has been weak in his support of Cuban dissidents and that he would be weak in supporting civil society as ambassador to Nicaragua as well. Rubio accused Farrar of meeting with Cuban government officials but not dissidents and questioned him about a cable leaked by Wikileaks in which Farrar evaluated the Cuban dissidents as old, split by rivalries, concentrated on acquiring financing, and not dedicating time to organizing a serious opposition movement in the country.
Farrar refused to comment on the leaked cable and said that it is important that the United States government speak with one voice to the Government of Nicaragua. He also said that one of his top priorities will be to urge Nicaragua to accept national and international observers for the election scheduled for November. Either Senator could put a hold on the nomination and block Farrar's appointment from being voted on by the Senate which could leave the US without an ambassador during the pre-election period. [This is the time when US interference in the election can have the greatest effect. Nicaragua Network Co-Coordinator Katherine Hoyt is leading a delegation to Nicaragua June 19-27 to investigate the US role in the election.] (El Nuevo Diario, June 9; La Prensa, June 8,)
5. Nicaragua-Honduras restore trade
On June 8, Nicaragua and Honduras officially reestablished trade relations that Nicaragua broke off after the coup against democratically elected President Manuel Zelaya in Honduras nearly two years ago. During the ruptured relations Nicaragua's exports to Honduras, mainly food products, fell by 37%. Restoration of trade will result in restoring health and safety inspections required for trade in chicken and beef. Nicaragua's Agriculture and Forestry Minister Ariel Bucardo called the move “important for the integration of Central America.” Diplomatic relations between the two countries were restored on May 22 after the Cartegena Agreement, negotiated by Venezuela and Colombia, enabled the return to Honduras of former President Zelaya and other members of resistance to the coup who had been in exile. (Radio La Primerisima, June 8,)
6. Include environment, group tells candidates
Nicaragua's foremost environmental group, the Humboldt Center, used World Environment Day to call on the presidential candidates to consider the environment in their plans to govern to the same degree that they consider economic and social policies. Citing decreasing water access and quality, global warming, and forest loss, the Humboldt Center called on candidates to reveal their plans to implement environmental policies that promote sustainability and national survival.
The environmental group also called for the government to abandon plans to build the Brito hydroelectric project which would include the building of two dams in the Departments of Rio San Juan and Rivas. The government of Nicaragua and the Brazilian consortium Andrade Gutierrez signed an agreement in 2009 to carry out feasibility studies on the project. The Humboldt Center said the environmental costs outweigh the benefits of the project which would produce 250 megawatts of electricity by 2014.
The Humboldt Center also expressed concern that a planned oil refinery (funded by Venezuela) and petrochemical plant will cause “significant environmental tensions” and urged the passage of legislation to strictly regulate refinery operations to protect environmental quality. It also called for the government to prioritize food sovereignty over bio-fuel production, to ban genetically modified crops, and pass laws to promote conservation and bio-diversity, promote local, sustainable sources of renewable energy, and preserve and expand nature preserves. (El Nuevo Diario, June 7, 9)
7. Ground broken on Chureca homes
At La Chuerca, an enormous dump in Managua, construction has begun on 50 of 258 houses for the families that have lived at the dump as garbage pickers. The project is funded by US$40 million from Spain and other money from the Managua city government. The project was delayed due to last year's floods and other difficulties, however, and did not break ground until last week.
"This is what we have always hoped for. We live now in a house made of zinc and pieces of plastic...but soon we are going to be able to say that we have a real house," said Maria Isabel Campusano, a resident of the dump community. Also included in the plans for the new La Chureca are a health center and a child care center.
Ninety percent of the old dump has been leveled and covered with earth. Pipes have been installed to vent the methane gas produced by decomposition of the buried garbage. Beginning in August a processing plant, built by the Spanish company Tragsa, together with national companies, is scheduled to begin processing the trash and allow the closing of the landfill. (La Prensa, June 7, May 19, 2010; Radio La Primerisima, June 7; El Nuevo Diario, June 7)
8. Assistance for agrotourism
A number of farms offering agro-tourism services will be studied for the next few days by a group of experts on rural tourism from Italy which will be consulting with Nicaraguan Agro-Tourism Farms. The group will report on areas they believe can be improved on the farms to increase tourism, based largely on the success Italy has had in this form of tourism.
Nicaraguan Agro-Tourism Farms is a public-private initiative that focuses on model tourist farms to serve as an example for the 75 farms that belong to the program. The organization emphasizes the importance of food security and sustainability in its work with the farms and seeks to generate improvements through small infrastructure projects that the farms cannot undertake on their own. (La Prensa, June 7)
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